2017 Annual Report Highlights from Financial Year 2017 July 1, 2016- June 30, 2017

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Foreword

Responsiveness and implementation are the two words that characterize FY17.

The WBG again proved its capacity to respond to new demands when called upon by development partners

and clients. The work already underway in the Middle East and Africa to respond to the protracted refugee

crises, was given an additional dimension with the evolving famine in parts of Africa and Yemen. Through the

WBG engagement, work to bridge the gap between the humanitarian and development efforts took a big step

forward.

The WBG also showed responsiveness as well as renewed leadership in the mobilization of private capital for

development. The Maximizing Finance for Development approach, while not new, holds good prospects for a

systematic Multilateral Development Bank system-wide approach to mobilization. This should incentivize

governments to carry out the necessary reforms to de-risk their countries and provide a recognizable model

to the private and institutional investors, for them to act on a larger scale.

Implementation of the Forward Look was at the center of Board work during Fiscal Year 2017. There was good

progress across many commitments, not least in areas of importance to the Nordic-Baltic Constituency,

including scaling up in fragile states, moving towards the 28 percent target on climate commitment,

addressing inequalities including gender, and governance. These are also areas where we continue to want

the World Bank Group to do even more and advance faster.

This fiscal year also produced a record replenishment of IDA that will help the Bank play a substantial role in

implementing the SDGs and the Forward Look in low-income countries. Technical discussions on capital

increases of IBRD and IFC are underway. Without such increases the role of the IBRD and IFC will gradually be

of less significance as their contribution to development in the middle-income countries will be smaller. Over

time, this could erode the very foundation of the World Bank Group as a leader in development.

To give a flavor of some of the new topics that the WBG is now grappling with which concerns us all, I just

want to mention two: First, the pressing issue of jobs – what does the future look like for a world with still

more people looking for jobs and still fewer jobs on offer due to technological advances. Second, and

interlinked to the first, is the importance of investing in people - in a still more technologically advanced world,

it is not the number of hands that will determine growth, but the brain power of the population.

After one year as the Nordic-Baltic ED, I continue to be struck by how well aligned WGB priorities are to those

of the Nordic-Baltic Constituency. This is a result of many years’ strong and solid cooperation between the

WBG entities and our countries. There is still important work to be done to ensure that policies and strategies

are put well into practice at the country level, and that they work for the poor. Here, continued feedback from

Embassies remains valuable for our work. Finally, let me use this opportunity to thank all colleagues in

Capitals, on whom we in the Nordic-Baltic Office depend so much in carrying out our work. Lastly, a great

thank you to colleagues in the Office for all your contributions during the year.

Susan Ulbæk

Executive Director

Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway, Sweden

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Table of Contents

Foreword ........................................................................................................................................................ i

Abbreviations ............................................................................................................................................... iii

Highlights of FY17 .......................................................................................................................................... 1

Nordic-Baltic Priority Areas ............................................................................................................................ 4

Climate: Delivering On The Promises ......................................................................................................... 4

Gender: The Mounting Evidence Into Practice ........................................................................................... 5

Stepping Up In Fragile States Including Hum-Dev, Peace-Nexus, And Famine Response ........................... 6

Governance, Domestic Resource Mobilization And Illicit Financial Flows: Moving The Tide ....................... 7

Creating Markets And Crowding In The Private Sector ............................................................................... 9

Annex A: The World Bank and the Nordic-Baltic Office at a Glance ............................................................... iv

Annex B: IBRD, IDA, IFC, MIGA FY17 Facts and Figures .................................................................................. v

Annex i : The World Bank Group Commitments FY15-FY17 .................................................................... v

Annex ii : The World Bank Group Regional Breakdown of Commitments .............................................. vi

Annex iii : The World Bank Group Sectoral Breakdown of Commitments ............................................. viii

Annex iv : The World Bank Group Disbursement FY15-FY17 ..................................................................xii

Annex v : Climate – Getting to 28% ...................................................................................................... xiii

Annex vi : Gender Indicators................................................................................................................. xiv

Annex C: The World Bank Group Selected Finance Data FY15-17 ..................................................................xv

Annex D : Nordic-Baltic Contributions to WBG Funds .................................................................................. xix

Annex E: Nordic and Baltic Staff in WBG FY16-FY17 .....................................................................................xx

Annex F: Nordic and Baltic Countries Procurement Data FY15-16 ................................................................ xxi

Annex G: Shareholding ............................................................................................................................... xxii

Annex: H: Summary of the Corporate Scorecard. ....................................................................................... xxiii

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Abbreviations

B2T Billions to Trillions

CCAP Climate Change Action Plan

CPF Country Partnership Framework

DRM Domestic Resource Mobilization

EDGE Economic Dividends for Gender Equality

FCS Fragile and conflict-affected situations

FCV Fragility, conflict and violence

FIF Financial Intermediary Fund

GBV Gender Based Violence

GCRP Global Crisis Response Platform

IBRD International Bank for Reconstruction and Development

IDA International Development Association

IFC International Finance Corporation

IFFs Illicit financial flows

MDBs Multilateral development banks

MIGA Multilateral Investment Guarantee Agency

MTRS Medium Term Revenue Strategy

NB Nordic-Baltic

NBC Nordic-Baltic Constituency

NBO Nordic-Baltic Office

OFCs Offshore Financial Centers

SCD Systematic Country Diagnostic

SDGs Sustainable Development Goals

StAr Stolen Asset Recovery Initiative

UN United Nations

We-Fi Women Entrepreneurs Finance Initiative

WB World Bank (IBRD/IDA)

WBG World Bank Group (IBRD/IDA, IFC, MIGA, ICSID)

WDR World Development Report

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Highlights of FY17

Implementation of the Forward Look

Agreement to and implementation of the Forward Look: A Vision for the World Bank Group in 2030 has been at

the center of World Bank Group (WBG) efforts, during FY2017. The Forward Look was endorsed at the 2016

Annual Meeting. It sets out four strategic directions for the WBG to deliver on the Twin Goals of ending

extreme poverty and boosting shared prosperity through sustainable inclusive growth, human development,

and building resilience:

1) Serving all Clients

2) Leading on the Global Agenda

3) Mobilize Capital for Development

4) Improving the Business Model

The NBC played an active role in the formulation of the Forward Look and made sure that all our priority areas

are well reflected in the document and the ensuing follow-up. The goals, priorities, and directions are all very

well aligned with Nordic-Baltic priorities and what we find important to further the implementation of the

Sustainable Development Goals (SDGs) towards 2030. With the Forward Look in place to guide the WBG, it is

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our expectation that the WBG will be able to play a significant role in delivering the SDGs, the Paris Climate

Agenda and the Financing for Development Agenda.

The global community has made great progress in reducing poverty over the past decades. From 2010 to 2016,

this trend has continued with extreme poverty falling from 20 percent of the world’s population to about 9

percent in 2016, as discussed in the first report on achieving the Twin Goals. This report confirmed that global

extreme poverty continues to decline, but slow global growth risks the achievement of the poverty reduction

goal. The report argues that to increase the rate of poverty reduction, the international community must focus

on income equality and it shows how reduction of income inequality in large populous countries would provide

a critical momentum for achieving the SDGs. More than 500mn people of the world’s 750mn poor live in

middle-income countries with the largest population in lower middle income countries, and hence the

motivation for the IBRD to continue to engage with this group of countries and shift resources in their

direction.

One of the key aspects of the Forward Look agreement is “serving all clients” - albeit with different value

propositions for countries at different levels of development. An ongoing discussion in the Bank concerns the

appropriate role of the WBG in upper middle-income countries. This discussion is exacerbated with the

postponement of the capital increases, as demands for loans are much higher than the supply. The Nordic-

Baltic position is that as countries grow and get better access to capital markets, the Bank’s value proposition

for these countries should increasingly focus on advice and sharing knowledge and learning. IBRD assistance

should be focused on the remaining gaps in development, delivery of global public good, and getting ready

for the eventual graduation. Such discussions are now part of all Board debates on strategies for relatively

higher income client countries.

In FY17, the WBG also continued to prove that it is responsive to shareholder needs and demands and is willing

to take a leading role on global issues. In parts of Africa and Yemen, the 2016 famine required the Bank to play

a much more active role in bridging the gap between humanitarian and development efforts. By using its

financial resources, analytical capacity, and convening power, the Bank helped move along the international

famine response in a collaborative effort with the UN. Another area is climate change, where the uncertainties

surrounding the implementation of the Paris Accord created by the new American administration were quickly

dismissed with WBG statements to stand by previous commitments.

On mobilization of more capital for development, the most prominent initiative was the development of the

Cascade approach to financing (also titled Maximizing Finance for Development) which will be rolled out more

systematically, in FY18. The basic concept is to prioritize commercial solutions where at all possible and

strengthen support for ensuring the necessary policy frameworks for private investments to take place. The

WBG also set forth new initiatives to develop and finance insurance schemes in the wake of pandemics and is

working to further refine and roll out insurance schemes as part of the crisis response platform. The ambition

level on Domestic Resource Mobilization (DRM) and tackling Illicit Financial Flows (IFFs) also increased, both

as part of the IDA18 commitments and as follow up to the Forward Look.

The fourth and final strategic direction of the Forward Look implementation is the New Business Model for

the Bank to become more agile and responsive to clients and development partners and to ensure deliverance

on the ground for the poor. Many initiatives have been set in motion to enhance the development impact of

interventions, including through the implementation of the Environmental and Social Framework and by

moving the attention of staff from project preparation to project implementation. Some of the major

discussions have centered around a risk based approach and what this entails. Nordic-Baltic countries have

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argued that we are willing to take larger risks, and find it necessary when wanting to move resources to fragile

and poorer countries, but that these risks should be clarified and where possible, mitigated. The Nordic-Baltic

Office (NBO) has also worked to ensure better knowledge sharing. Significant steps to enhance knowledge

management are now underway, which can also play a role in mitigating risks in difficult circumstances.

Implementation of the Forward Look is moving ahead in all areas. Budgets and staffing are increasingly

aligned to strategic priorities. Despite this, the NBC continues to push for greater staffing for operations in

country offices, particularly in fragile states. The NBC finds this essential if the Bank is going to deliver in these

very difficult and risky environments. The chapters to follow will look in greater detail at some key Nordic-

Baltic priorities.

Financial Highlights

FY17 saw a record commitment of US$ 19.5bn in IDA countries. This meant that IDA17 was fully committed

by the end of FY17. The record commitment to IDA was offset by a sharp decline in IBRD lending of 24 percent

compared to last year, which resulted from the need for the IBRD to manage its lending due to increasing

capital constraints. Commitments from the IBRD fell to US$ 22.6 bn, despite strong demand in a continued

volatile and uncertain global economic environment. Similarly, due to increasing capital constraints, IFC had

to hold back and only increased its business volume by 2 percent, in FY17. Meanwhile, in FY17, MIGA reached

a record high guarantee portfolio of US$17.8 bn, attributable to the record new business volume of US$ 4.8bn.

Overall, WBG commitments decreased by 4 percent to US$ 61.6 bn in FY17. While the share of development

policy financing declined, there was an increase in Investment Project Financing disbursements and

disbursement ratio for both IDA and IBRD (Annex iv).

The financial results of FY17 were positive. IBRD added to the general reserves US$ 672mn and IFC US$

1.213mn. The good result for IBRD came due to the gradual kick-in of the higher lending costs, agreed upon

in 2014. For IFC, the good result is mainly based on high treasury income. The outlook for FY18 points to more

uncertainty and volatility, in particular for IFC. For IBRD, net income is projected to continue to increase due

to high previous lending and higher loan pricing measures, as well as continued budget discipline.

Negotiations of the IDA18 replenishment resulted in a record IDA18. If all pledges are honored, IDA should

over the coming three years be able to deliver US$ 75bn to low-income countries. The negotiations of IDA18

also produced several innovative instruments that will play a large role in delivering on the Forward Look; not

least, the commitment to double financing for fragile states, a large Crisis Response Window, a Refugee

Window and a new Private Sector Window which should help IFC to mobilize private sector investments, in

IDA countries.

The large replenishment of IDA allows the WBG to enhance its role in low-income countries. In accordance

with the Lima Road Map, technical work continued during FY17 with a view to providing a basis for negotiation

of capital increases for IBRD and IFC, based on packages consisting of internal measures and paid-in capital.

As part of this technical work, an external review of the IBRD and IFC capital adequacy has been

commissioned; the outcome of which will be ready after the 2017 Annual Meetings.

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Shareholding

At the 2016 Annual Meetings, Governors endorsed a dynamic formula as the basis for future shareholding

reviews. The formula combines the weight in the global economy (80 percent) and generosity measured by

contributions to IDA (20 percent). During FY17, discussions of the outcome of a Shareholding Review

continued with reviews of different scenarios. The NBC stands to keep its overall share of IBRD shares of a

little more than 3 percent, in all scenarios. The process in IFC is just getting underway. Negotiations on new

Shareholding, based on the Dynamic Formula agreed in autumn 2016, will continue in FY18.

Nordic-Baltic Priority Areas

Climate: Delivering On The Promises

Following the landmark deal in Paris in 2015 and the new World Bank (WB) climate strategy from 2016, climate

has been on top of the WB agenda over the past year. The climate agenda came into the limelight following

the uncertainties created by the new U.S. administration, but the WB strategy has not changed and ambitious

climate targets remain valid and are strongly supported by the Board of Executive Directors. The Nordic-Baltic

Office (NBO) finds that the World Bank Group (WBG) is making good progress on the Climate Agenda and is

doubling down on efforts to be able to deliver on promises.

The WBG has an ambitious agenda when it comes to climate change, as outlined in the Climate Change Action

Plan (CCAP). During the year, the WBG has recommitted to ensuring that by 2020, 28 percent of its operations

will generate climate change co-benefits. The strategy is strongly backed by Senior Management and

permeates most operations. The CCAP outlines four priorities and associated objectives for 2020: (i) support

transformational policies and institutions, (ii) leverage resources, (iii) scale up climate action and (iv) align

internal process and work with others. The action plan also identifies six high impact focus areas: (i) renewable

energy and energy efficiency, (ii) sustainable mobility, (iii) sustainable and resilient cities, (iv) climate-smart

land use, water and food security, (v) green competitiveness, and (vi) ensuring that no one is left

behind. However, the single most well-known piece of strategy is the 28 percent target. This means an annual

financing of US$ 16bn by 2020, if maintaining current financing levels. The WBG has also committed to

mobilize an additional US$ 13bn in external financing, by the same year. However, reaching the target will

depend on client demand and sustained aggregate WBG lending volumes as well as access to concessional

finance. For FY17, the IBRD/IDA reached 22 percent of commitments, up from 19 percent in FY16. Similar

figure for IFC is 25 percent up from 18 percent (Annex v).

The Board of Executive Directors broadly and strongly supported the CCAP in an informal meeting on the

progress on implementation of the action plan, in April. The Board re-emphasized the 28 percent target with

some, but not all chairs, pointing that it should remain valid under all future capital scenarios. Management

confirmed it remains fully committed to the 28 percent target, but also emphasized the original caveats

related to the 28 percent and stressed that a capital increase would support more financing for climate action.

Broad agreement existed on the need to find an appropriate balance between adaption and mitigation efforts,

even though financing and methodology may make it difficult to strike such a balance. The Board also

encouraged Management to strengthen efforts to address climate change strategically in Systematic Country

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Diagnostics as well as Country Partnership Frameworks, as well as relate to the Nationally Determined

Contributions as this was essential to generate demand for climate action.

The Nordic-Baltic overall assessment is that climate-related work is making good progress and that the WB

team has an ambitious and credible action plan to deliver on the promises. While the WBG is one of the most

important players in the global climate space, there is great need to target project financing for maximum

impact and additionality and to also use funds available to mobilize and leverage other sources of funding,

including funds from the private sector. This means different things for various parts of the WBG. Concessional

finance in IDA18 will seek to raise the share of adaptation and mitigation co-benefits and mainstream climate

in country programs. For IBRD, targeting the policy and institutional environment, coupled with investments

where private sources are not available, will be key. For IFC, creating markets in tandem with IBRD and

mobilizing private capital will be crucial. In addition, the WBG will continue to have a large role to play as a

knowledge bank in continuing to support the broader climate change and green growth agenda, including

new financial instruments geared to mobilize private capital and carbon pricing, in collaborating with MDBs

and bilaterally with member governments. The NBC has a great role to play across this space in which the

WBG has repeatedly requested us to continue to take a leadership role.

Gender: The Mounting Evidence Into Practice

The World Bank Gender Strategy was adopted in 2016. The focus over the past year has been on

implementation and operationalization of the strategy. Analytical work to underpin policy dialogue and

interventions is being supported. Over time, this should lead to a more even implementation across regions

and sectors. There has been a lot of focus on two sub-segments of the strategy over the past year; gender-

based violence and women entrepreneurship. The NBO is fully supportive of the work, but would like to see a

more even implementation and a broader focus. WBG Management made new commitments to promote

gender equality within the WBG.

World Bank Management provided an update on the gender strategy in March, arguing that the WB is now

moving to the next level in terms of gender. The ambition is to go beyond mainstreaming, by identifying in

each SCD, measures that can genuinely transform the situation for women, which will then be followed up in

the CPF. To do so, gender labs have been established in the regions to support analytical work and policy

dialogue as well as the design of interventions. The old system of “gender informed” projects is being phased

out for the more analytical “gender tag” process, which in the short-term would lead to a lower gender

headcount ratio, as the latter system is more ambitious.

The main challenges for implementation are related to uneven capacity among staff and lacking demand

among clients, as well as sticky norms. This leads to very uneven implementation for the gender Strategy. As

a remedy, training programs have been rolled-out that are available to all and mandatory for some. Financing

to ensure more strong implementation remains dependent on external sources from donors, including from

Nordic countries. With a new round of financing requests, the NBCs stress that going forward, some of this

funding must come from the Bank’s internal resources, at the same time realizing that new donor funding will

be necessary to reach the goals.

The work against gender based violence has been prominent during the past year, especially in the FCV

context. The Gender Based Violence Task Force, which was established by the Bank in 2016, presented a paper

on the topic to the Board, in July 2017. The recommendations put forth are ambitious and comprehensive,

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considering all stakeholders to a project, including local communities, government, contractors, consultants

and WB staff. Capacity building on gender based violence prevention will be included as part of the roll-out of

the Environmental and Social Framework, as well as that of the Procurement Framework.

The Board approved the World Bank Group’s engagement in support of the Women Entrepreneurs Financing

Initiative (We-Fi), in June 2017. The engagement implies the establishment of a Financial Intermediary Fund ,

acting as a Trustee and secretariat for that Fund as well as the role of the World Bank as an implementing

agency of the Financial Intermediary Fund. The We-Fi will leverage more than US$ 300mn in donor funding to

provide financial, managerial and technical support for women entrepreneurs to the tune of more than US$

1bn. Nordic-Baltic countries are also amongst the contributors to this Fund.

The NBO welcomes the strong support from Bank Management for the importance of gender and will work

with the Gender responsible teams to turn strategy into action. The NBO welcomes the gender analysis

becoming more ambitious with the gender tag and encourages even more implementation of gender tags

across sectors and regions. The initiatives on gender based violence and entrepreneurship make a lot of sense,

but should not be the only focus in the work on FCVs and women’s economic empowerment, respectively. It

is important to keep a broad gender focus.

WBG Management has also made commitments to promote gender equality in the World Bank Group. The

WBG is already EDGE certified and as part of the He for She Initiative, promoted inter alia by Iceland, President

Kim made new gender targets, including reaching parity amongst gender at senior staff level in 2020.

Stepping Up In Fragile States Including Hum-Dev, Peace-Nexus, And Famine Response

Preventing and addressing Fragility, Conflict and Violence and Forced Displacement remains a key priority for

the WBG, as 50 percent of the world’s poor are expected to live in countries affected by fragility and conflict,

by 2030. The WBG is increasingly taking a more holistic approach to FCVs, addressing the full spectrum of

situations, from prevention and crisis response to transition and recovery. This also implies sustained

engagement even in active conflict situations. The WBG also played a key role in pressing forward the New

Ways of Working to bridge the gap between humanitarian relief and development efforts, in particular in the

context of long-term protracted crises and famine in parts of Africa and Yemen.

The significant increase in funding to FCV in IDA18 (US$ 14bn a doubling compared to IDA17), the Crisis

response window and the refugee window, which were all strongly supported by the Nordic-Baltic countries,

are a clear signal of the development partner’s and the WBG’s strong commitment to implement the FCV

strategy and strengthen the engagement in fragile situations.

In September 2016, the WBG put forward the Global Crisis Response Platform (GCRP), which outlined how

the WBG would act in situations of crisis and what instruments were available in the Bank. This platform was

used to coordinate the Bank efforts internally and with other players to the famine in parts of Africa and

Yemen. It stresses the use of already existing programs and projects to prevent crisis and if that is insufficient,

ways to enhance the effort.

During the famine crisis in North-East Nigeria, The Horn of Africa and Yemen, the initial view of the WBG was

that the traditional humanitarian actors were best placed to respond to this humanitarian crisis. As the crisis

developed, however, it became clear that WBG intervention was essential to provide data and analysis,

funding (more than US$ 1.6 bn) of which a large part was reallocation/redesigning already existing programs

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and convening power. Following the crisis, there is increasing awareness and acceptance in the WBG that

intervention by the WBG is necessary and warranted, also in humanitarian situations. And once the crises were

recognized, the GCRP proved to be a useful tool for rallying Bank-wide support for the effort.

While the WBG is not, and should not be a humanitarian actor, its strong development background, convening

power, and considerable analytical and innovative capacity as well as financing capacity, including flexible

crisis financing instruments, make the WBG an essential player in any crisis. The NBC would like to see the WB

play a role in crisis situations, while at the same time pointing to the importance of complementing the UN

Humanitarian organizations and being a bigger player on prevention, including building insurance schemes to

reduce the impact on people and development from crises. The NBC has long emphasized the need to

strengthen the partnership with the United Nations (UN) in general, but in particular, in FCV. The UN-WB

Partnership Framework and the Humanitarian-Development-Peace Initiative ensure closer collaboration and

new ways of working together between the UN and the WBG in FCV, to build resilience and tackle fragility

and forced displacement.

The NBO will continue to support and closely monitor the FCV agenda and the WBG’s delivery on its FCV

commitments. An important part of this is to ensure that the WBG has the right instruments and procedures

for acting rapidly and flexibly, as is required to be successful in changing environments. Furthermore, ensuring

there are enough staff with the right competences on the ground in fragile situations, is crucial.

Governance, Domestic Resource Mobilization And Illicit Financial Flows: Moving The Tide

The importance of Governance for delivering the Twin Goals gained even more traction with the launch of the

World Development Report 17 on Governance and the Law. Follow-up is apparent in many SCDs and CPFs.

There is also good and strong progress on a more active role for the WBG on the agendas of Domestic

Resource Mobilization (DRM) and combatting Illicit Financial Flows (IFFs), as part of the delivering on the

Forward Look. Beyond these areas, the NBC is striving to increase the WBG’s bar in complying with existing

international standards, when using offshore financial centers in WBG operations.

The World Development Report 2017: Governance and the Law1 firmly identified governance as a determining

factor for development progress. The report created some discussion in the Board as few countries viewed it

as being overly political. However, there was broad recognition that governance plays a big role in producing

development outcomes, and as long as the report focused on the functionality of institutions and their

capacity to deliver outcomes rather than on specific types of government, it was welcomed. The NBC was

supportive of the report and its conclusions. The NBC is pleased to see that political economy analysis and

governance issues and risks to countries development efforts are increasingly addressed in SCDs and CPFs.

DRM and combatting IFFs remain at the forefront of the Development Agenda. Activities are identified under

three headings: 1) International cooperation: during FY17, the Platform for Collaboration on Tax2 (jointly with

the IMF, OECD, and UN, the WB hosts the Secretariat of the Platform) issued a paper to the G20 on Enhancing

the Effectiveness of External Support in Building Tax Capacity in Developing Countries, which introduced the

medium-term revenue strategy (MTRS) and further developed coordination among the different

1 http://www.worldbank.org/en/publication/wdr2017 2 www.worldbank.org/en/programs/platform-for-tax-collaboration

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organizations; 2) Global Public Goods providing tools and data to help countries design tax reforms; and 3)

Country level activities, where the WBG is designing comprehensive packages (86 lending operations of

US$1.3 bn) of support that broaden and deepen the tax base of client governments. On IFFs, the WB launched

a diagnostic tool targeting such flow and IFC continued its policy of screening projects to protect against

misconduct and IFFs.

The NBC finds that enhancing DRM and combatting IFFs are an essential parts of the Financing for

Development Agenda; therefore, we commend that the WB has moved DRM and IFFs to the forefront of the

Development Agenda. There is pressing need for developing countries to expand fiscal space as part of the

“billions to trillions” effort to mobilize resources to meet the SDGs. These two topics have been positioned as

policy commitments in the Governance and Institutions Special Theme of the IDA18 Replenishment, by also

introducing a target to achieve a share of domestic revenue of at least 15 percent of GDP, what is considered

a minimum threshold for a state to function effectively.3

The WB has continued to establish analytical and operational approaches to strategically address IFFs as a

core developmental issue for country clients. In FY17, there were 30 National Risk Assessments in process and

17 of them were completed.4 The WB has continued to develop methodologies for estimating different

dimensions of IFFs (Rapid Assessment Tool, Methodology for Core Principles of Measuring IFFs). The WB

Financial Market Integrity team has supported the IFFs agenda through eight ongoing and recent lending

3 http://documents.worldbank.org/curated/en/368341467989536274/pdf/106107-BR-IDA-SecM2016-0111-PUBLIC.pdf 4 Ethiopia, Tanzania, Zambia, Andorra, Cyprus, Hong Kong, Moldova, Brunei, Uganda, Cambodia, Sierra Leone, Botswana, Vatican, Latvia, Pakistan, Turks and Caicos, Antigua and Barbuda;

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operations (mainly DPOs), covering AFR, ECA, LAC and SA.5 The prior actions or triggers focus on anti-money

laundering, asset declarations and asset recovery. In FY17, continued Stolen Asset Recovery Initiative (StAR)

support led to the freezing of over 11 bn TZ shillings in Tanzania in 2016 with an additional 1.6 bn TZ shillings

in May 2017, the recovery of US $250,000 in Tunisia, the recovery and return of US$ 1.3 bn in Ukraine, and a

compensation/confiscation order for 50 bn UG shillings in Uganda. In Somalia, StAR efforts helped recover

US$22 mn in displaced government funds. Similarly, through StAR’s collaboration with the Financial Market

Integrity team at the WB, Namibia was able to uncover a US$6 bn trade-based money laundering and customs

fraud scheme.

The NBO has also initiated work to promote a revision of the WBG OFC Policy by suggesting to raise the

compliance bar on the OFC operations, specifically screening jurisdictions through the OECD Base Erosion

and Profit Shifting(BEPS) prism. The goal is to bring WBG (IFC/MIGA) on par with ongoing work in other

international development banks (EIB) and ensure that jurisdictions listed on the non-compliant list of the

Global Forum or BEPS would not be used as an intermediary in WBG operations.

Creating Markets And Crowding In The Private Sector

The WBG in general and the IFC, in particular, have been very active over the past year in not only explaining

the need of creating markets and crowding in the private sector to deliver on the 2030 agenda, but also in

developing a strategy that lays out how this may occur. The Cascade is at the center of this work and so is the

IFC 3.0 strategy, including the IDA private sector window, the private sector diagnostics, advisory strategy,

creating markets window and the ex-ante development impact framework.

Creating markets and mobilizing private capital is at the heart of the WBG efforts to mobilize private sector

capital for development. The Cascade, formally launched this winter, is a central concept in this context. It is

not a new approach to development finance, but used more systematically it could potentially play a large

role in creating the conditions for private sector financing of investments that countries would previously have

borrowed for from the MDBs. The basic principle is to minimize the use of public resources and only use them

if the market is unwilling or unable to provide financing. It is an attempt to shift the default from public to

private and it incorporates earlier thinking on blended finance and public-private partnerships. And it stresses

the primary role of MDBs in supporting an environment which will make private sector investments possible.

The reasoning behind the Cascade is not ideological; it is emphasized that private financing is not necessarily

better than public, but rather a practical one as the idea is to maximize the capital available to fill the large

financing gap.

There is a broad consensus on the need to mobilize private capital to close the financing gap, as MDBs provide

roughly US$ 127bn per year in developing financing, while the funding needs for the SDG is estimated at US$

3.9tr per year. This challenge is elaborated in the Financing for Development or Billions to Trillions (B2T)

agenda, as set out in the Addis Ababa Action Agenda. The World Bank is a champion and thought leader in

this process. The Nordic-Baltic Constituency supports this agenda, stressing the following issues: First, it is

crucial to think broadly about financing, as the international community is only likely to achieve the B2T

5 Guatemala, Kyrgyz Republic, Liberia, Moldova, Pakistan, Panama, Sierra Leone and Ukraine.

10

agenda by tapping, leveraging and mobilizing a wide range of financial sources. More can be done across the

board but it is imperative to do so in sustainable ways. Second, de-risking is an absolute key to incentivize the

vast pools of private capital to invest in developing countries. Third, financial innovation is perhaps the most

promising venue, but also one of the riskier.

An important feature of the Cascade is the idea that MDBs have an important role to play in creating markets

where they do not exist or work poorly. Public resources can and should be used to create markets from

scratch or to address market failures. It can be concrete issues like access to electricity, sanitation and banking

or structural things like lack of competition or regulatory issues. The idea is that by using public resources to

create markets, private sector actors and financing will follow suit and generate jobs and sustainable

economic growth.

The NBC has been supportive of the analytical work and the conceptualization of the Cascade and related

strategies. The World Bank is a thought leader on the Financing For Development agenda, in general, and

particularly on B2T efforts. There are also several concrete projects, such as the MCPP Infrastructure, Scaling

Solar, and Cornerstone projects, that are closely aligned with these ideas. But they remain relatively small in

terms of volume – hence emphasis must be put on scaling up and simplifying. The private sector windows

created in IDA18 for FCVs are other welcome initiatives that should help further this agenda. Explaining the

merits of this approach to other MDBs and clients, thereby creating a larger supply and demand, is another

crucial challenge moving forward. Finally, there are still many projects within the World Bank that remain too

unambitious in this regard. We would like to see the Bank maximizing private sector mobilization and market

creation in all projects – not only minimizing the use of public resources

iv

Annex A: The World Bank and the Nordic-Baltic Office at a Glance

The World Bank was established in 1944 primarily to help rebuild Europe after the Second World War. Today, the

WBG’s mission has shifted to help reduce poverty in the developing world through economic and social

development and reconstruction. The World Bank is formally one of the UN specialized agencies, entirely with its

own autonomous financing and decision-making, with 189 member countries as shareholders. The World Bank

Group consists of five separate organizations: IBRD and IDA provide low-interest loans, interest-free credit, and

grants to developing country governments; IFC promotes private sector investment by co-investing with equity and

loans to companies in developing countries as well as providing advisory services, both to companies and the public

sector; MIGA provides guarantees against political risk to investors in and lenders to developing countries; and

ICSID settles investment disputes between foreign investors and their host countries. 1

The World Bank's highest decision making body is its Board of Governors, representing member countries as

government shareholders. The Governors, generally finance and development ministers from all member

countries, meet once a year for an annual meeting, jointly with the IMF and twice a year at a 25 member

Development Committee meeting providing political guidance for the World Bank. The daily decision making is

delegated from Governors/Ministers to 25 Executive Directors, representing one or several of the 189 shareholders

in the Executive Board. The Nordic and Baltic countries are represented at the Board by one Executive Director

(ED).

The ED is assisted by the Nordic-Baltic Office (NBO), where the following people worked during the time covered

by the report:

Executive Director Susan Ulbæk (Denmark)

Alternate Executive Director Martin Põder (Estonia)

Senior Advisor Peter Ellehoj (Denmark)

Senior Advisor Arto Eno (Finland)

Senior Advisor Emil Hreggvidsson (Iceland)

Advisor Anna Dravniece (Latvia)

Advisor Eivile Cipkute (Lithuania)

Advisor Marianne Krey-Jacobsen (Norway)

Advisor Marcus Svedberg (Sweden)

Sr. Executive Assistant Betsy Barrientos

Program Assistant Veronica Marchant

The Nordic-Baltic Executive Director is the Vice Chair of the Human Resources Committee (HR) and is a member

of the Committee on Development Effectiveness (CODE).

________________________

1 The International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the

International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for

Settlement of Investment Disputes (ICSID).

v

Annex B: IBRD, IDA, IFC, MIGA FY17 Facts and Figures

Annex i : The World Bank Group Commitments FY15-FY17

FY15 FY16 FY17

IBRD 23.5 29.7 22.6

IDA 19.0 16.2 19.5

IFC 17.7 18.8 19.3

MIGA 2.8 4.3 4.8

Total 63.0 68.96 66.20

WBG Commitments

US$ millions

Note: IFC commitments includes core mobi l i zation.

MIGA va lues report the insti tution's fi sca l year gross

i ssuance.

23.529.7

22.6

19.0

16.2

19.5

17.718.8

19.3

2.8

4.3 4.8

0

20

40

60

80

FY15 FY16 FY17

US

$ b

illio

ns

WBG Commitments

MIGA

IFC

IDA

IBRD

vi

Annex ii : The World Bank Group Regional Breakdown of Commitments

FY15-17 IBRD IDA Commitments by Region

* Note: IDA lending commitments does not include $50m Pandemic Emergency Fund IDA allocation as this is not allocated by region. However, it is included under Global/Other in tab 'FY17 Global Commitments'

FY17 IBRD IDA Commitments by Region

Region 2015 2016 2017

AFR 1,209 669 1,163

EAP 4,539 5,176 4,403

ECA 6,679 7,039 4,569

LCR 5,709 8,035 5,373

MNA 3,294 5,170 4,869

SAR 2,098 3,640 2,233

Total 23,528 29,729 22,611

IBRD Lending Commitments

by Fiscal Year ($m)

Region 2015 2016 2017

AFR 10,360 8,677 10,679

EAP 1,803 2,324 2,703

ECA 527 233 739

LCR 315 183 504

MNA 198 31 1,011

SAR 5,762 4,723 3,827

Total 18,966 16,171 19,463

IDA Lending Commitments by Fiscal

Year ($m)

vii

FY15-17 IFC Commitments by Region

FY15-17 MIGA Commitments by Region

Region $ millions1 Percent $ millions1 Percent $ millions1 $ billions1 Percent

Latin America and the Caribbean2,379$ 22.57% 2,688$ 24.18% 2,693$ 2.7$ 22.72%

East Asia and the Pacific2,288$ 21.71% 2,307$ 20.75% 2,323$ 2.3$ 19.59%

Sub-Saharan Africa 1,831$ 17.38% 1,398$ 12.58% 2,084$ 2.1$ 17.58%

Europe and Central Asia1,534$ 14.55% 2,131$ 19.17% 1,738$ 1.7$ 14.66%

South Asia 1,402$ 13.30% 1,428$ 12.85% 586$ 0.6$ 4.94%

Middle East and North Africa893$ 8.47% 955$ 8.59% 2,348$ 2.3$ 19.81%

Global 212$ 2.01% 210$ 1.89% 84$ 0.1$ 0.71%

Total 10,539$ 100.0% 11,117$ 100.0% 11,854$ 11.9$ 100.00%

IFC FY15-17 Long-Term Commitments By Region

Dollar Amounts in Millions, for IFC's Own Account As of June 30, 2015

FY17

1 Some amounts include regional shares of investments that are officially classified as global

projects. Note: Pakistan is mapped to Middle East & North Africa region in IFC.

FY15 FY16

viii

Annex iii : The World Bank Group Sectoral Breakdown of Commitments

IBRD Lending by Sector

FY15 FY16 FY17

Agriculture, Fishing, and Forestry 843 561 754

Education 1,496 1,788 1,074

Energy and Extractives 3,361 4,599 4,434

Financial Sector 3,433 2,657 1,879

Health 893 1,181 1,189

Industry, Trade, and Services 1,684 3,483 2,694

Information and Communication Technologies 90 194 503

Public Administration 3,175 5,111 4,754

Social Protection 2,687 1,393 778

Transportation 3,202 4,569 2,551

Water, Sanitation, and Waste Management 2,664 4,192 2,000

Total 23,528 29,729 22,611

Note: Numbers may not add to totals because of rounding. As of fi sca l 2017, new sector

categories have replaced the previous taxonomy as part of an internal data modernization

effort. Past fi sca l year data have been revised to reflect the new categories and therefore may

not match figures publ ished in previous fi sca l years .

IBRD Lending by Sector

US$ millions

- 1,000 2,000 3,000 4,000 5,000 6,000

Agriculture, Fishing, and Forestry

Education

Energy and Extractives

Financial Sector

Health

Industry, Trade, and Services

Information and Communication Technologies

Public Administration

Social Protection

Transportation

Water, Sanitation, and Waste Management

IBRD Lending by Sector in US$ millions

FY17 FY16 FY15

ix

IDA Lending by Sector

- 500 1,000 1,500 2,000 2,500 3,000 3,500

Agriculture, Fishing, and Forestry

Education

Energy and Extractives

Financial Sector

Health

Industry, Trade, and Services

Information and Communication Technologies

Public Administration

Social Protection

Transportation

Water, Sanitation, and Waste Management

IDA Lending by Sector in US$ millions

FY17 FY16 FY15

FY15 FY16 FY17

Agriculture, Fishing, and Forestry 2,525 1,849 2,025

Education 2,124 1,431 1,773

Energy and Extractives 1,461 2,814 1,891

Financial Sector 661 443 1,227

Health 2,197 1,191 1,246

Industry, Trade, and Services 687 841 1,541

Information and Communication Technologies 265 78 519

Public Administration 2,744 1,500 1,954

Social Protection 1,928 2,475 1,913

Transportation 2,191 2,277 3,271

Water, Sanitation, and Waste Management 2,183 1,271 2,102

Total 18,966 16,171 19,463

Note: Numbers may not add to totals because of rounding. IDA lending total for FY17 does

not include a $50 mi l l ion grant for the Pandemic Emergency Financing Faci l i ty. As of fi sca l

2017, new sector categories have replaced the previous taxonomy as part of an internal

data modernization effort. Past fi sca l year data have been revised to reflect the new

categories and therefore may not match figures publ ished in previous fi sca l years .

US$ millions

IDA Lending by Sector

x

IFC Lending by Sector

IFC FY15-16 Commitments by Sector

FY15 FY16

Industry

Financial Markets 4,697$ 4,474$

Infrastructure 2,056$ 1,813$

Agribusiness & Forestry 1,375$ 1,062$

Consumer & Social Services 748$ 1,046$

Oil, Gas, & Mining 515$ 824$

Funds 507$ 534$

Manufacturing 365$ 824$

Telecommunications & Information Technology 275$ 541$

Total 10,539$ 11,117$

FY15 Dollar amounts in millions, for IFC's own account as of June 30, 2015

FY16 Dollar amounts in millions, for IFC's own account as of June 30, 2016

IFC FY15-16 Commitments by Sector

$- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000

Financial Markets

Infrastructure

Agribusiness & Forestry

Consumer & Social Services

Oil, Gas, & Mining

Funds

Manufacturing

Telecommunications & Information Technology

IFC FY15-16 Commitments by Sector in US ($ millions)

FY16 FY15

xi

IFC FY17 Commitments by Sector

Industry

Commitments

($ millions)Percent

Financial Markets 5,862$ 49.45%

Infrastructure 1,705$ 14.38%

Agribusiness & Forestry 1,155$ 9.75%

Health & Education 692$ 5.84%

Tourism, Retail & Property 429$ 3.62%

Oil, Gas, & Mining 435$ 3.67%

Funds 356$ 3.00%

Manufacturing 989$ 8.34%

Telecommunications & Information Technology 232$ 1.96%

Total 11,854$ 100%

IFC FY17 Commitments by Sector

FY17 Dollar amounts in millions, for IFC's own account as of June 30, 2017

$- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000

Financial Markets

Infrastructure

Agribusiness & Forestry

Health & Education

Tourism, Retail & Property

Oil, Gas, & Mining

Funds

Manufacturing

Telecommunications & Information Technology

IFC FY17 Commitments by Sector in US ($ millions)

xii

Annex iv : The World Bank Group Disbursement FY15-FY17

FY17 IBRD IDA Gross Disbursements by Region

19.022.5

17.9

12.9

13.2

12.7

9.3

10.0

10.4

0.0

20.0

40.0

60.0

FY15 FY16 FY17

US

$ b

illio

ns

WBG Disbursements

IFC

IDA

IBRD

FY15 FY16 FY17

IBRD 19.0 22.5 17.9

IDA 12.9 13.2 12.7

IFC 9.3 10.0 10.4

Total 41.2 45.70 41.0

WBG Disbursements

US$ millions

xiii

IBRD / IDA Disbursements on Instruments

*IPF – Investment Project

* PforR – Program for Results

* DPF - Development Policy Forum

Annex v : Climate – Getting to 28%

22%

16% 15%17%18% 17%

19% 19%

25%22% 22% 23%

0%

5%

10%

15%

20%

25%

30%

% IFC Climate OverTotal Commitment

% IDA Climate Co-Benefits Over TotalIDA Commitment

% IBRD Climate Co-Benefits Over TotalIBRD Commitment

% Total WBCommitment

Total Climate Percentage Commitments

FY15 FY16 FY17

xiv

Annex vi : Gender Indicators

xv

Annex C: The World Bank Group Selected Finance Data FY15-17

IBRD Selected Finance Data

xvi

IDA Selected Finance Data

xvii

IFC Selected Finance Data

xviii

MIGA Selected Finance Data

xix

Annex D : Nordic-Baltic Contributions to WBG Funds

Contributions paid in during FY12-FY17Q2 (in USD millions ) - Nordic and Baltic countries view

Development Partner IDA IBRD/IDA TFs FIFs IFC TFs Total

Nordic countries

Denmark 482 412 570 26 1,490

Finland 439 206 242 5 892

Iceland 14 5 1 - 20

Norway 687 1,495 1,516 58 3,756

Sweden 1,865 907 1,840 37 4,649

Total Nordic countries 3,487 3,025 4,169 126 10,807

Baltic countries

Estonia 7 4 1 - 12

Latvia 5 - 0 - 5

Lithuania 10 - 0 - 10

Total Baltic countries 22 4 2 - 28

Grand Total 3,509 3,029 4,171 126 10,835

Note:

(i) The above values are rounded off to the nearest dollar.

(ii) Latvia and Lithuania have contributed USD 0.41 million and USD 0.11 million respectively towards FIFs.

xx

Annex E: Nordic and Baltic Staff in WBG FY16-FY17

WBG Active Full-Time Nordic And Baltic Staff As Of June 30, 2017

MIGA

Core Other* Core Other* Core Other* Core

Denmark 3 0 50 3 14 1 0 71

Estonia 0 0 4 0 0 0 0 4

Finland 4 0 25 0 4 0 0 33

Iceland 0 0 2 0 1 0 0 3

Latvia 0 0 11 0 3 0 1 15

Lithuania 0 0 12 0 2 0 0 14

Norway 0 0 24 3 3 0 0 30

Sweden 2 1 45 4 6 0 2 60

Grand Total 9 1 173 10 33 1 3 230

*Incl. JPO And SPAS

TotalGEF IBRD IFC

WBG Active Full-Time Nordic And Baltic Staff Distribution By Grade Level As Of June 30, 2017

(Incl. JPO And SPAS)

Grade Denmark Estonia Finland Iceland Latvia Lithuania Norway Sweden Total

GC - GD 0 0 0 0 0 4 0 1 5

GE 2 0 1 0 1 1 1 2 8

GF 9 0 10 2 4 4 4 9 42

GG 31 2 14 0 8 4 13 27 99

GH 23 2 6 1 2 1 9 14 58

GI 1 0 2 0 0 0 0 2 5

GJ 1 0 0 0 0 0 0 0 1

UC 4 0 0 0 0 0 3 5 12

Grand Total * 71 (+2) 4 (-1) 33 (-5) 3 (0) 15 (-1) 14 (+2) 30 (0) 60 (+3) 230

* In Comparison to FY15-FY17 data

xxi

Annex F: Nordic and Baltic Countries Procurement Data FY15-16

Denmark Estonia Finland Iceland Latvia Lithuania Norway Sweden

Constituency

Total

Country Total 51,789,409$ 568,748$ 12,893,624$ 18,128,645$ 7,177,615$ 36,761,419$ 3,018,574$ 89,385,702$ 219,723,737$

Percentage of WB

Total 0.14% 0.002% 0.04% 0.05% 0.02% 0.10% 0.01% 0.24% 0.60%

Overall Results Fiscal Years 2015 -2017

Bankwide Total $36,783,679,954

Percentage

Difference0.60%

Consultant Services Civil Works GoodsNon-Consulting

ServicesFY Total

Percentage of

WB Total

Denmark $7,893,707 $1,490,157 $9,383,864 0.08%

Estonia $209,700 $209,700 0.002%

Finland $3,955,737 $3,955,737 0.03%

Latvia $347,960 $347,960 0.00%

Lithuania $159,478 $681,208 $840,686 0.007%

Norway $1,467,423 $1,467,423 0.01%

Sweden $6,489,907 $1,133,665 $3,972,106 $11,595,679 0.10%

Constituency Totals $20,523,913 $3,305,030 $3,972,106 $27,801,050 0.23%

Bank-wide Total $2,267,608,672 $2,556,142,115 $343,904,917 $11,937,625,763

Constituency % of

Total 0.91% N/A 0.13% 1.16%

Fiscal Year 2015

Consultant Services Civil Works GoodsNon-Consulting

ServicesFY Total

Percentage of

WB Total

Denmark $2,973,939 $7,914,171 $10,888,110 0.08%

Estonia $359,048 $359,048 0.00%

Finland $5,478,590 $5,478,590 0.04%

Latvia $187,530 $5,147,425 $5,334,955 0.04%

Lithuania $1,095,653 $18,756,176 $19,851,829 0.14%

Norway $893,491 $893,491 0.01%

Sweden $381,750 $38,536,870 $19,167,020 $58,085,640 0.41%

Constituency Totals $11,370,002 $57,293,045 $32,228,617 $100,891,664 0.72%

Bank-wide Total $1,562,709,211 $9,221,389,433 $3,153,179,331 $14,081,769,093

Constituency % of

Total 0.73% 0.62% 1.02% N/A

Fiscal Year 2016

xxii

Annex G: Shareholding

Consultant Services Civil Works GoodsNon-Consulting

ServicesFY Total

Percentage of

WB Total

Denmark $9,336,965 $10,714,140 $20,051,106 0.19%

Finland $3,423,296 $3,423,296 0.03%

Iceland $100,700 $18,027,945 $18,128,645 0.17%

Latvia $14,500 $1,480,200 $1,494,700 0.01%

Lithuania $16,068,904 $16,068,904 0.15%

Norway $633,531 $633,531 0.006%

Sweden $6,843,724 $2,504,909 $9,348,633 0.09%

Constituency Totals $20,352,716 $34,096,850 $14,699,250 $69,148,815 0.64%

Bank-wide Total $912,658,090 $5,053,767,586 $1,572,470,790 $10,764,285,097

Constituency % of

Total 2.23% 0.67% 0.93% N/A

Fiscal Year 2017

xxiii

Annex: H: Summary of the Corporate Scorecard

WBG Tier 3 | World Bank Group Performance

* Data in red are as of FY17 Q2 and data in black are for FY16 unless otherwise indicated.

xxiv

WB Tier 3 | World Bank Performance

* Data in red are as of FY17 Q2 and data in black are for FY16 unless otherwise indicated.

http://scorecard.worldbankgroup.org/about